Giacomo Zucco Talks Bitcoin, Privacy and Why He Hates Coinbase

Giacomo Zucco is a Bitcoin consultant and educator. With a background in theoretical physics, his attentions have turned increasingly to Bitcoin since 2012, and his commentary, insights and humour have made him one of the must-follow figures on Crypto Twitter.

I asked Giacomo a few questions on Bitcoin, privacy, ETFs, and why he dislikes Coinbase.

How did you get into crypto?

I don't like the term "crypto" very much anymore, since today it mostly refer to things I don't follow or promote in any way.

I got into Bitcoin initially in late 2012, when I started to learn about it from very different angle: as "dark web money" in the agorist and pro-privacy groups I was following, as the "new gold standard" in the Austrian and anti-central-banking groups I was following, as a new interesting technology among co-workers (I was working in legacy payment systems back then). I was impressed by the way Bitcoin was linking so many very different aspect of my life and interests. My wife suggested me to quit my regular job and to go full time into Bitcoin in May 2013. I did it.

How would you describe what you would do?

I consult big incumbent companies about Bitcoin (both in terms of economics and in a technical capacity), I teach some Bitcoin classes in universities and private academies, I collect and funnel donations from incumbents to Bitcoin non-profit FLOSS development.

What do you see as the most important property of Bitcoin: Store of Value? Medium of exchange? Not being able to confiscate it? Something else?

All of the above descriptions are valid, important and somehow correlated. I think that "state-resistant ideal money" would probably sum everything up. Of course some functions of money will be evident chronologically before others: for example today the "store of value" function is more important and general than the "medium of exchange" one, which is mostly relegated to some very specific niches. But they are connected in a deep way, at the end of the day. Bitcoin is "hard money" (difficult to create, inflate, manipulate) and "dark money" (difficult to track, confiscate, censor), enforced by technological means in a world where hard and dark money have been banned politically.

What would you say to critics who think proof-of-work is too energy intensive and damaging to the environment?

Huge energy consumption in Bitcoin is a requirement, not a bug. It’s by design, not by accident. The only way to make something hard to produce, is to make it expensive to produce. There’s no other way around. The “waste” argument is often used to spread flawed arguments about Bitcoin being “environmentally-unfriendly."

This is not the case, for several reasons.

First, energy in PoW is not any more “wasted” than in any other production process for any other (physical or intellectual) good: it’s actually used, not wasted. Second, the consumption of energy is likely going to remain lower than historical alternatives (we are talking orders of magnitude less than the energy consumption for gold extraction during the gold standard, for example). Third, entrepreneurs generating PoW in to get bitcoins aren’t incentivised to consume more energy: if anything, ceteris paribus, they are incentivised to consume less energy for the same computation (for them energy is a cost, not a revenue), increasing optimization and efficiency with new technological breakthroughs or with generation choices that can have a waterfall effect on other energy-consuming industries.

Are you excited about Lightning?

Yes, of course. I was always concerned for the fungibility problems created by the blockchain design (less so for the scalability ones, but those are relevant too). Lightning Network is a very elegant solution to increase fungibility and privacy in Bitcoin. It will also enable in a very trust-minimized and pretty censorship-resistant way many use cases that would have had otherwise relegated to trust-based and censorship-prone alternatives. It's also a layer where you can experiment more, with less concerns for security or consensus-critical design choice and more focus on UX.

Not at all, actually the other way around. There isn't a single reason in the world Bitcoin should be adopted if it seriously lacks privacy. If you want to use monetary systems where you get spied upon, tracked, censored, robbed, you already have plenty of legacy options, which are already widespread and supported everywhere.

Do you think an ETF will be good for Bitcoin?

There will be pros and cons, but I tend to lean toward a "yes,” mostly. Real Bitcoin users will still have to use Bitcoin for real, but Bitcoin "speculators", who don't need Bitcoin directly for its own property, but who just (reasonably enough) want to be exposed to "Bitcoin-flavored risk", for sound reasons of portfolio un-correlation, will need these kind of legacy tools. And in the end I think they will help the real Bitcoin indirectly. Of course there are some risks of centralization, manipulation, fractional reserve...but they should stay mostly limited on the legacy market, leaving the real Bitcoin network mostly unaffected, at least in the long run.

Do you believe in any projects other than bitcoin? If you had to pick 3, what would they be?

Sure, I do. There are many project I love and follow other than Bitcoin, even just remaining in the field of FLOSS projects. If I had to pick 3, they would be: the Tor protocol, the Bittorrent protocol, the PGP protocol (even if I think the latter would need a very strong UX redesign to be used by "normal people"). The more governments around the world make the Internet impossible to use in freedom and independence, the more such projects, along with Bitcoin and others, will help to make such efforts ultimately useless.

Why do you dislike Coinbase?

For many different reasons. The first, and more general, is that I don't like "crypto start-ups" which operate in the same exact way as traditional banks. Why I said before that I think more traditional, regulated tools like ETFs certainly have their own utility. If you need that kind of stuff I think it would be more reasonable to get it from your banks, not from newcomers that pretend to be anything new, when they are in fact just a bank. Secondly, they spread a lot of confusion by falsely promoting their own custodian (banking) service as a "wallet", so much so that I still meet people who think they are using a Bitcoin Wallet because they have some bitcoin-denominated credit on the Coinbase bank. But these are just very mild criticisms.

Then Coinbase started to support (and in some case even ‘lead’) basically every kind of attack against Bitcoin, from the one launched by the R3CEV employee (and government contractor) Mike Hearn, to the recent so call "New York Agreement."

When supporting said attacks, Coinbase spokespersons have promoted blatant lies and falsehoods, spreading misconceptions and confusion about Segregated Witness, BTC1 broken implementation, etc. Since my business is mostly education, I dislike people whose business is mostly active disinformation.

Then they started to support all kind of scammy clones of Bitcoin, always promoting them as "better bitcoins,” often lying about their features, risks and trade-offs, sometimes even actively manipulating their market with organized pumps (like they did with Bcash).

Again: they shut down, as a payment processor, many users for political reasons only: from Gab to Wikileaks. When they went after users for allegedly "legal" reasons, they often went way ahead of their legal obligation, by actively sharing user information with government agencies even without subpoenas.

Recently, they acquired an Italian startup focused on deanonymizing and spying upon Bitcoin users, whose members were also famous for helping dictatorships and authoritarian governments to track down and kill political dissidents and other targets.

Many people started to give a hard time to Coinbase about this last scandal, but I think this acquisition does align pretty well with the general ethical standards of that company. Also, in the PR-crisis management attempts, they revealed several other bad things, such as previous leaks and sales of private user information.

You called Craig Wright the Greatest Showman. Do you think it is a good idea for crypto media to give him coverage?

Well, at this point I am seriously conflicted.

At the beginning my answer to this question would have been a clear "no, it isn't.” But then many people with poor understanding of our "space", especially in the media, started to give actual credit to his hilarious claims (also under the pressure of former Bitcoin "VIPs", like Gavin Andresen, supporting Craig's fraud), then it probably become reasonable to start covering the topic again, at least to debunk all the fake "evidence" like forged PGP signatures, post-dated blog entries, post-dated PGP keys, fake handwritten signatures on legal documents, and so on. Then it came a phase in which I was worried again we were giving him too much coverage.

But recently, especially after his tons of daily "announcements" about new patents, new academic papers and new Bitcoin 0day exploits, after the obvious copy-cuts and plagiarism, after the wrong "hello world" programming attempt, after his hysterical tales about South American adventures with drug lords...well...I think that at this point whoever still gives him any credibility is literally beyond help. For people with any kind of grasp on reality is already pretty obvious that he is actually a con-man ... as for the others, there's nothing we can really do anymore, probably, at this point.

What in your opinion does crypto media get wrong about bitcoin and the industry in general?

Many things, unfortunately. First, the fact that Bitcoin is not mostly a technological revolution, but a monetary revolution.

Second, the (frankly incredible) fact that Bitcoin seems to work as expected (at least so far) doesn't mean that now every extraordinary claim should be accepted (or even just necessarily investigated, when time and resources are scarce) without extraordinary evidence. Ultimately, the fact that there isn't really any "crypto" industry: there is the Bitcoin revolution, along with thousands of projects before it and around it.